Post by Dan Malachowski, Marketing Director
Yahoo and Microsoft recently announced that they have amended their search partnership, which began in 2010 and was slated to run for ten years. Under the original agreement, Microsoft (via Bing Ads) has served all the desktop paid search ads on Yahoo. Under the amended agreement, Yahoo (via Yahoo Gemini) will now serve up to 49% of Yahoo desktop paid search ads. Microsoft will continue to serve the other 51% of ads appearing on Yahoo desktop search. And Yahoo will continue to handle Yahoo mobile search and native ads, which remains unchanged from the original agreement.
Also of note, Yahoo’s sales force, which was previously responsible for all Bing ads that appeared on Yahoo, will now only handle Yahoo ads: the 49% of desktop, all mobile and all native ads. Microsoft’s sales force will handle the management of Bing Ads campaigns, which will make up the other 51% of Yahoo desktop ads. This means that Yahoo paid search advertisers will now have both a Yahoo and Microsoft representative, like the old days prior to the original deal. This change could occur by July 2015.
The amended deal also includes a new opt-out clause, which enables either party to end the search pact “by delivering a written notice of termination” at any time before the deal’s expiration in 2020.
WHY IS THIS HAPPENING?
Under Marissa Mayer, Yahoo has been focused on “taking back search.” The amended partnership—which gives Yahoo control of 49% of its desktop search market—is a step in this direction. While Yahoo still currently needs Microsoft’s Bing Ads infrastructure to deliver search experiences that can compete with Google, its focus on innovation with Gemini could enable it to run free before the partnership’s 2020 expiration.
Because management of Bing Ads campaigns (up to 51% of ads appearing on Yahoo desktop) will now shift to Microsoft, Yahoo can focus more on Gemini product innovation and marketplace responsiveness, potentially setting up Gemini to serve all Yahoo ads in the future.
IMPLICATIONS for ADVERTISERS
With 49% of Yahoo! desktop ads now on Gemini, advertisers have more incentive to utilize Gemini. Additionally, it’s possible that this 49% may end up being the more prominent Yahoo listings, with Bing’s 51% making up the second-tier placements. With more focus on product development, advertisers should expect more betas and testing opportunities from Yahoo, and these new opportunities will also likely be managed through Gemini.
Beyond access to 49% of Yahoo desktop searches, Gemini also gives advertisers inclusion in (1) Yahoo mobile search (smartphones and tablets) and (2) Yahoo Native Ads. Mobile search and native advertising should be high priorities for advertisers in 2015 and beyond. To illustrate, Performics predicts that, by the end of 2015, more searches will be performed on mobile devices than desktops. And native advertising is often the ideal way to integrate performance content and performance media to engage consumers in the right place, at the right time. In fact, Yahoo native Stream Ads have driven conversions at high efficiency for Performics clients.
Yahoo and Microsoft’s amended partnership will result in new opportunities and betas for advertisers on Yahoo, as well as accelerated innovation on the Gemini platform. All advertisers should explore leveraging Gemini—which is stepping up integration with the search management platforms (e.g. Marin)—as these changes take effect.
For more information on the amended Yahoo & Microsoft search partnership, contact your Performics account team today.